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December 1, 2005 6:10 pm

Labour unrest adds to studios’ problems

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Increasing militancy among Hollywood unions has joined the list of woes confronting California’s entertainment industry, a report from a leading economic study group reveals.

The potential for disruption is compounding the uncertainty generated by changes in technology, competition and consumer demand, and a sharpened focus on the bottom line among the media conglomerates that now control the studios.

As a start, the Los Angeles Economic Development Corporation suggests the industry should work harder at articulating its challenges to politicians and the public who have a false impression of a sector “where everything is glamorous”.

While state politicians and many ordinary people “think the industry consists of only major studios and highly-paid stars  . . .  many of the rank-and-file workers . . .  are scrambling to make a living”, the corporation says.

With some 249,000 employees in the LA area, compared with 260,000 each in international trade and tourism, entertainment media provide a crucial pillar of the regional economy.

Its attractions such as Grauman’s Chinese Theatre and other historic sites link it closely to tourism, but it also has a “halo effect” on other local specialities such as fashion, jewellery and furniture design, the study says.

The roots of unrest among film and TV unions, which have recently elected a new cadre of tough-talking leaders, lie mainly in demands from actors and other workers for a larger share in the earnings from home video.

The studios have so far held the line, but the issue is far from dead.

Signs of further potential dissent have already emerged with the advent of video pod-casting and other new distribution methods.

So-called runaway production – the migration abroad or to other states for film and TV programme making – is a persistent source of complaints from both for employees and employers.

The industry’s efforts earlier this year to persuade state politicians to offer tax and other concessions to keep low-budget film-makers in California foundered on the Democrat-controlled legislature’s suspicions of “a rich industry trying to get some unwarranted incentives”, the study says.

“Overlooked in the uproar were both the jobs and tax revenues lost whenever a film is shot in another state,” said Jack Kyser, the corporation’s chief economist, claiming the incentives packaged as proposed would probably have paid for itself.

Also overlooked, the study says, is the fact that most jobs in the industry rank as “below-the-line” positions in production crews, support services such as camera rental and catering, left behind when a production is taken out of state.

Pay in Los Angeles film and TV production – although skewed by the price of leading talent – averages $105,000 a year compared with $39,000 for all industries.

This, the report argues, with its implications for job creation and tax revenues, is reason enough for other states to offer incentives to lure producers, and reason enough for a more considered look at new legislation to help keep production in California to be presented in Sacramento next year.

Some concessions could help relieve tension in a business where, the study says, only one in 10 feature films covers its costs at the cinema box office and one in four makes money after all revenues streams – notably DVD sales – are accounted for.

This year’s weak box office, with revenues down about 6 per cent, and faltering sales of home videos, are taking their toll. Lay-offs at studios such as Warner Bros, and budget scrutiny at Walt Disney could signal the start of a correction after a 7 per cent surge in statewide employment in film and TV in 2004, and a further 4 per cent this year.

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